A Collaborative Approach to Affordable Housing at SXSW
Nonprofits consider "a better way to tackle a big problem”
By Nina Hernandez,
6:00AM, Sat. Mar. 9, 2019
It’s easy to forget in our little Austin bubble that the housing crisis we negotiate every day is something communities across the country are also grappling with.
But it's definitely not just us.
Friday’s “A Collaborative Approach to Affordable Housing” SXSW panel emphasized that nationwide effort, the associated struggles, and how collaboration between affected communities can spark development elsewhere.
Boston-based Housing Partnership Network is comprised of more than 100 affordable housing and community development nonprofits that work to develop affordable housing. Joining HPN President & CEO Tom Bledsoe were the CEOs of two HPN offshoots: Kathy Laborde of the Gulf Coast Housing Partnership and Develop Detroit's Sonya Mays.
GCHP started after Hurricane Katrina devastated New Orleans and the surrounding gulf coast. Laborde, who has lived in New Orleans for 20 years, was a real estate developer at the time, and pointed out the disaster was exacerbated by the decades of disinvestment New Orleans had already suffered. “GCHP was an opportunity to demonstrate a better way to tackle a big problem,” she said.
The group now partners with cities, housing authorities, nonprofits, and other entities to develop affordable housing, mixed income, and special needs housing, as well as other residential services like health care and schools. It’s a “share the spoils” mentality, she said.
Mays is a native Detroiter who left Michigan, worked on Wall Street, and eventually returned to her hometown to help manage the 2013 bankruptcy. Bledsoe and HPN began working with community stakeholders on the idea of Develop Detroit, and during that process met and recruited Mays to helm it.
Detroit wasn’t hit by a natural disaster, but it was devastated by the 2010 foreclosure crisis. “Building wasn’t a priority when people were losing their homes,” Mays said. Despite a lack of infrastructure, however, business, government, and philanthropic interests began to align. Out of that grew Developing Detroit, which renovates and builds affordable and mixed-income housing. “Collaboration has really become the way forward,” she said.
Both Laborde and Mays said the individual crises faced by their regions paved the way for the all-hands-on-deck model’s survival. However, both advised cities facing this kind of trouble in the future against constructing a new entity, and instead to focus on improving existing structures. “After a disaster, my advice is not to begin a startup,” Laborde said. “Find a partner you can help. Be an advocate on state and local tax policies.”
Bledsoe noted some of the work being done in other parts of the country, including right here in Texas. He took a second to recognize Austinite and Foundation Communities founder Walter Moreau, who has helped bring 3,000 affordable units into existence locally. “This model can really work,” Bledsoe said.
The panelists also gave attendees some insight on the typical rates of returns for investors on these types of projects, as capital is an ongoing struggle. While Mays can sometimes boast as high a rate as 10% or 12%, most of her projects are in the 5-10% range. But that’s possible because of Detroit’s low land values. A 3% or 4% return is more common.
Bledsoe said one market that hasn’t yet been tapped is high tech. It’s been tough to bridge the gap between the numbers and what tech types typically expect from an investment. “We don’t have losses, we don’t have foreclosures, our members don’t go out of business,” he said. “We have a pristine track record, yet we are kind of viewed as … risky. The returns can be reasonable given the risk, and you’re going to have a tremendous impact.”